Third Annual Symposium of The Nigerian Microfinance Platform...

Third Annual Symposium of The Nigerian Microfinance Platform 1

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6 Third Annual Symposium of The Nigerian Microfinance Platform

Table of Contents Page

Executive Summary 7 Communiqué 9 Welcome/ Opening Remark 11 Goodwill Address 12 Convener’s Address 14 Lead Paper Presentation from the Perspective of a Regulator 17 Lead Technical Paper I 19 Technical Paper from International Special Guest 21 Panel Discussion 24 Interactive Session with the Panel 28 Vote of Thanks 31 Chairman’s Closing Remarks 32

Appendices 33

A Program of Events 34

B List of Officials 36

C List of Participants 37

D List of Sponsors 40

E List of Organising Committee Members 40

F Rapporteur Team 40

G Communique Team 41

H Media Team 41

I List of Acronyms 41

J Opening Address 42

K Opening Statement 44

L Convener’s Address 47

M Keynote Address 53

Slides of Technical Paper 58

N Lead Technical Paper I 59

O Technical Paper from International Special Guest 72


Executive Summary

The third annual symposium of the Nigerian Microfinance Platform was held on Wednesday, 24th May, 2017 at Chelsea Hotel, Central Area, Abuja with the theme: Enhancing Savings Mobilization through Mobile Money, Agent/Branchless Banking and Digital Money and other FinTech Solutions to Achieve Financial Inclusion. The Symposium was supported by Accion MfB, Fortis MfB, Hasal MfB, NPF MfB, La Fayette MfB, LAPO MfB, and AFOS Foundation, and brought together directors and senior management of the member banks of the Nigerian Microfinance Platform, regulators and other stakeholders. Delegates in legal practice, the academia, the commercial banking sector as well as consulting firms were also represented.

Deputy Governor, Financial System Stability (FSS), Central Bank of Nigeria (CBN), Dr. Joseph Nnanna, who was represented by Mrs. Tokunbo Martins, Director, Other Financial Institutions Supervision Department {OFISD} CBN, who also delivered the convener’s address. Goodwill addresses were delivered by Alhaji Umaru Ibrahim, MD/CEO, Nigeria Deposit Insurance Corporation (NDIC) and Mr. Hans Joachim Maurer, MD/CEO of AFOS Foundation who were represented by Mr. Sunday Oluyemi and Mr. Bernhard Vester, Coordinator, Africa, AFOS Foundation, respectively. Three technical papers were delivered by Mr. Joshua Etopidiok, Director of Special Insured Institutions Department, NDIC, Mrs. Linda Quaynor, Managing Director, EFInA and Mrs. Angela Wambugu, Associate Director of MicroSave Limited, Kenya.

From the survey report of the EFInA 2016 Access to Financial Services, it was evident that the number of financially excluded adult Nigerians increased from 39.5% in 2014 to 41.6% in 2016. As such, it was agreed that for the variance to be bridged, a savings culture should be promoted through affordable, convenient channels like digital financial services (DFS) to attain the set target for financial inclusion. Some of the ways to achieve this are for the banks to collaborate and review their methods and approach to service delivery, leveraging technology such as FinTech to design customised digital financial services to those that are financially excluded.

Similarly, there is a need to focus on those geopolitical zones with the highest adult population size in tandem with the largest size of informal savings. The opportunities that abound in these areas recommend that MfBs should embrace FinTech to service these people at the bottom of the pyramid and explore the opportunities to bundle micro-savings products along with micro-insurance and micro-pension products to further deepen their offerings.

Conversely, MfBs should understand the risks inherent in embracing technology, because in as much as the potentials are huge, so also are the emergent risks. Regulators and supervisors should also continue to review these technological solutions and products that could have high impact on banks’ assets, proffer advice and issue regulatory policies to guide how individual banks and stakeholders deploy these solutions.

The panel discussion that followed was moderated by Mrs. Modupe Ladipo, Chairman,


EFInA Board of Directors and the discussants were Dr. Godwin Ehigiamusoe, Managing Director, LAPO Microfinance Bank Limited (represented by Mr. Elijah Osadebanwen) , Mr. Akin Lawal, Managing Director, NPF Microfinance Bank Plc (represented by Mr. Jude Ohanehi ), Mr. Guilluame Valence, Managing Director, Advans La Fayette Microfinance Bank, Mr. Rogers Nwoke, Managing Director, Hasal Microfinance Bank Limited and Mr. Tiko Okoye, Managing Director, Fortis Microfinance Bank Plc.

The panel discussion concluded that indeed, the deployment of technology to offer digital financial services will enhance service delivery as well as bring more people into the formal financial sector whilst reducing operational cost. The real challenge however lies in the cost of this technology, as many MfBs can hardly afford it. It was therefore agreed that the shared service approach should be adopted. This is currently noted in the unified technology (IT) platform subsidised by the CBN for the MfBs.

The shared agent network model can also be engaged through the National Association of Microfinance Banks to reach and service those in remote areas. Alternatively, MfBs can also collaborate and join resources to have their own agency network. There was a consensus that the regulators should provide more support to MfBs through consumer awareness and education, so as to gain public trust, while the MfBs will also work on the quality of their service.

In the communiqué delivered by Mrs. Tutu Ogunnaike, former Deputy Director, OFISD, CBN, it was reiterated that financial inclusion can only be achieved when there is a collaborative arrangement between the operators, to deploy digital financial services using shared products and services in savings mobilization.


Communiqué

At the end of the symposium, a number of key decisions, recommendations and resolutions evolved, and they are listed as follows:

1. Achieve financial inclusion target of 80% by year 2020.

2. Regulators to provide incentives for innovative products and services to the microfinance sub-sector.

3. Operators should collaborate in order to design mobile driven banking products and services to people mostly in the rural parts of Nigeria. The viability of microfinance banks imbibing digital financial system (DFS) in savings mobilization and providing financial services that will drive financial inclusion, is hinged on effective and cost-friendly collaborations.

4. The type of products designed should be customised and specific for the profile of the different customers and not a one-size-fits-all approach.

5. MfBs should explore the opportunities to bundle micro-savings products along with micro-insurance and micro-pension products to further deepen their offerings.

6. Fast track digital financial payments system in microfinance banks and invest in digital technology. While it may be expensive for some MfBs, shared technology platforms can be easy to deploy. Microfinance banks should therefore intensify partnership towards a shared digital platform.

7. In embracing technology, the emergent risks should be identified, understood and adequately managed. Similarly, financial and operational risks must be carefully managed and mitigated by the regulatory framework to avoid moral hazards.

8. MfBs should look at the option of giving free advisory services to customers as a form of subtle marketing.

9. Microfinance banks should build the capacity for their staff to use the IT platforms to provide seamless banking services.

10. Review banking methods and approaches to service delivery, using technology such as FinTech.

11. Encourage savings mobilization mostly in the North Central, North East and North West geopolitical zones of Nigeria.

Mrs. Tutu Ogunnaike, former Deputy Director of OFISD presenting the key symposium Outcomes and Communique


12. Develop marketing strategies that would attract those that save at home and other informal places.

13. Capable MfBs should be included in the cheque clearing system. MfBs should collaborate to promote this course.

14. The Association of Microfinance Banks needs to work to develop a self-regulatory system that enables them to address their risk factors, engage regulators and promote sustenance within the sector.

15. Microfinance banks should engage in shared agent network through their association, managed by a third party such as the approved CBN super-agent or, MfBs can join resources to have their own agency network.

16. Operators should have a holistic survey to get better understanding of what will create customers’ trust in microfinance banks.

17. Improve consumer awareness about successful microfinance banks in order to boost confidence in the sub-sector.

18. Microfinance banks should continuously review the quality of the services they offer.

19. Extend credit bureau services to more microfinance banks.

20. Expand stakeholder linkages and collaboration to create an enabling environment for microfinance banks.

21. MfBs should look at the option of sub-associations / sub-committees for the different tiers of MfBs because they all have their unique challenges – National, State and Unit.


Welcome/ Opening Remark

Dr. Okwu Joseph Nnanna, Deputy Governor, Central Bank of Nigeria

Mrs. Tokunbo Martins, Director OFISD, CBN, who represented the CBN Deputy Governor, Dr. Nnanna welcomed everyone to the third annual symposium of the Nigerian Microfinance Platform. In his remark, he stressed the importance of the microfinance sub-sector since the microfinance policy was launched in 2005. In as much as the potentials are enormous, so also are the challenges daunting. Notwithstanding, the CBN will continue to play a prominent role to ensure the stability of the sub-sector as well as the entire financial system.

This is reinforced by the fact that the sub-sector is expected to cater for the bottom of the pyramid persons, provide assistance to the low end of the market, in order to cultivate good banking habits as well as give financial and non-financial services to these categories of people. This invariably will help to reduce poverty at the grassroot. On the other hand, microfinance banks should also act responsibly in discharging these duties.

The theme of this event “Enhancing Savings Mobilization through Mobile Money, Agent/Branchless Banking and Digital Money and other Fintech Solutions to Achieve Financial Inclusion” could not have come at a better time when technology has begun to change the narratives. It is therefore, paramount for the sub-sector to engage and deploy technology to deliver its services even as the nation tries to achieve its set target of reaching a large number of financially excluded persons. Clearly, all the new initiatives powered by IT, such as the combined effects of mobile money with the active involvement of Telcos, cryptocurrency among others, cannot be ignored. This is evident in the noticeable transition from debit advices by SMS alert and local server based storage to cloud computing, visiting bank branches to drawing cash from ATMs, online applications, etc.

In spite of these tremendous benefits that technology brings, it also comes with emergent risks. Hence, bank assets should always be protected by mitigating such risks. Equally, regulators and supervisors should continue to study these channels and products that could have very high impact on how the banking system is run, proffer advices and issue regulatory policies to guide how individual banks and stakeholders deploy these solutions.

In his final note, he assured the participants that the CBN will continue to support and promote the uniqueness of the sub-sector, while it ensures a strong and stable financial system in the interest of the populace.

Mrs. Tokunbo Martins, Director of OFISD delivering the opening speech as representative of the Deputy Governor, Central Bank of Nigeria


Goodwill Address

Managing Director / CEO, Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, FCIB, mni

Alhaji Ibrahim who was represented by Mr. Sunday Oluyemi, welcomed everyone to the third annual symposium of the Nigerian Microfinance Platform. He emphasised that the gathering provided an opportunity for the industry stakeholders to deliberate on the challenges as well as prospects for the maximum use of innovative financial services solutions (mobile money, agency/branchless banking and digital money) in savings mobilisation.

It was noted that the previous year’s symposium pushed for consolidation in the MfB sub-sector as a strategy to achieve sustainable operations. NDIC however, also encouraged the MfB operators to embrace the fundamentals for growth initiatives, with emphasis on strategic planning, effective risk management and robust corporate governance. For this year’s symposium, the theme could not be more apt at a time where traditional banking approaches are being sidelined for digital banking platforms through the use of IT-although this has not been fully optimised by the MfBs in their service delivery. According to the EFInA Access to Financial Services report (2016), financial inclusion ratio deteriorated from 39.5% in 2014 to 41.6% in 2016, meaning that additional 2.1 million adult Nigerians became financially excluded despite the fact that 60.4% (58.22 million) of the adult population have access to a mobile phone. Hence, there is the urgent need for MfBs operators and regulators to fast track the deployment of digital financial payments systems into the MfB space.

Globally, investment in financial technology is on the rise and financial inclusion initiatives using IT have been used to drive economic growth in some jurisdictions such as Tanzania and Kenya. For instance, M-Pesa has been widely used to deepen financial inclusion for the poorest socio-economic groups and in fact, recent statistics indicated that M-Pesa used in Kenya and Tanzania resulted in an addition of over 21 million and 7.5 million of financially included people respectively. A similar occurrence is witnessed in China as well.

Alhaji Ibrahim urged all the MfB operators to devise IT strategies that can be used to bring on board more women and youths into the Nigerian financial system and proffered the following suggestions:

∙ MfBs (especially the national ones) should collaborate to understand the peculiarities of the Nigerian rural populace, women and youths towards designing mobile-driven banking products and services.

Mr Sunday Oluyemi, representative of the MD, NDIC delivering his opening address


∙ Provide incentives for innovative products and services in the MfB sub-sector.

∙ Support for capacity building for MfBs operators and telecommunication companies to provide seamless banking services by cherry-picking the emerging ‘Block Chain Technology’.

In his final words, he encouraged participants to challenge and expand their frontiers of knowledge and skills in financial inclusion and FinTech, because by so doing, the target to achieve financial exclusion of 20% by 2020 will be attainable.

Managing Director/ CEO, AFOS Foundation, Mr. Hans Joachim Maurer

Mr. Maurer was represented by Mr. Bernard Vester who highlighted the mission of AFOS as to serve the economically active poor. This mission is best achieved in Nigeria through the support given to the sub-sector to allow for affordable and demand-driven financial products.

To achieve this, AFOS promotes:

∙ Value-driven organisational development;

∙ Corporate governance;

∙ Management development; and

∙ Savings mobilisation.

On the other hand, the sub-sector must also invest heavily in technology in order to reach out to the rural areas. This explains the reason why AFOS engaged MicroSave Consulting from Kenya to prepare a shift change towards a digital savings culture.

Mr. Bernard Vester, giving the opening remark from AFOS Foundation


Convener’s Address

Mrs. Tokunbo Martins, Director, OFISD, CBN; Policy Plans for Enhancing Digital Financial Services for Savings Mobilization by MFBs

Mrs. Martins reiterated the displeasure on the rise in the number of financially excluded persons by 2.1 percent from 39.5% in 2014 to 41.6% in 2016 according to the latest figures released by EFInA. These figures along with the data from CBN and news report on the growing volume of currency outside the formal banking system further suggests that there is a huge opportunity that the microfinance banks can harness. MfBs should therefore, identify and understand the reasons why people choose to keep their funds outside the formal banking system. Equally, they must develop attractive financial products that would bring in the ‘truant’ funds, while growing their balance sheets as well as find their place in the new focus of Government to finance Micro, Small and Medium Enterprises.

In order to achieve this, MfBs need to review their methods and approach to service delivery using technology such as FinTech. FinTech makes financial systems and the delivery of financial services more efficient and the AFOS Project in partnership with MicroSave Kenya is expected to deliver a shared savings product through the use of technology. However, in embracing technology, caution must be exercised as the inherent risks must also be identified, understood and mitigated. Examples of such FinTech landscape include digital and mobile payment, Big data and analytics, Blockchain technology, among others.

Due to the rapid rate of digital transformation in banking, the MfBs cannot be left behind and as such the regulatory body, Central Bank of Nigeria, will provide support in the following ways:

Mrs. Tokunbo Martins, Director OFISD and Convener of the Nigerian Microfinance Platform delivering her techincal paper

MD/CEO, Hasal MfB (Mr. Nwoke), Country Representative, AFOS Foundation (Dr. Achu) and MD, Advans La Fayette MfB (Mr. Valance)


∙ Unified IT platform with modules for Agent banking, MSME lending, cloud computing, integration with the payment system, among others, which all the MfBs are expected to key into.

∙ Enrollment of MfB clients into NIBSS Bank Verification Number database. CBN has given a deadline of 31st July 2017 for this to be completed.

∙ Facilitated use of credit bureau services for MfBs.

∙ Virtual Currency and Blockchain Technology Committee to explore its potential benefits and how these benefits can be safely harnessed.

In spite of the enormous benefits the use of technology will be bringing to the sub-sector, it also poses challenges to the regulators and these include:

∙ How to facilitate innovation because the CBN expects banks to be competitive among themselves and globally whilst maintaining a safe and sound financial system.

∙ Promoting financial stability, which is the second core function of the CBN.

∙ Mitigating cyber-risks such as ‘ransom ware’, which evolve from some of these innovations.

∙ Effective management of risks - Operational risks, Credit risks, Compliance/ money laundering risks.

∙ Data security even outside the cyber space

∙ Unknown unknowns

Irrespective of the aforementioned challenges, the CBN will continue to support financial inclusion, following the recommendation of the Consulting Group to Assist the Poor (CGAP) such as permission of non-bank retail outlets to serve as agents and consider carefully any restrictions on the range of permissible agents and types of relationships permitted-this has been covered in the CBN Agency guidelines.

Also, to evolve a risk-based AML/CFT approach adapted to the realities of small, remote transactions conducted through agents which the three tier KYC should address, create robust but simple mechanisms for consumer protection, covering problems with retail agents, redress of grievances, price transparency, and consumer data privacy. The Consumer Data Protection in CBN is expected to address issues of this nature.

The CBN will consider and adopt the best practice in some of these jurisdictions and some of the best practises being considered are:

∙ A global framework developed by the Financial Stability Board for FinTech regulation that will encourage innovation while guarding against abuse, inequity, and risky behavior.

∙ Payment Service Directive (PSD 2) which mandates banks to open their APIs to allow third party technology build on their data to improve financial services.


However, there must be cooperation with the technological companies or possibly the MfBs could obtain their own license.

∙ In term of Data operability, there’s recognition that new technology brings along with it all sorts of risks and as such Sandboxes are used to mitigate such risks for security purposes, especially in untested projects of FinTech and innovations in the payments space.

∙ BVN watch-list for fraudsters.

In conclusion, Mrs. Martins pointed out that although innovations resolve current challenges, they also create new ones. Therefore, financial and operational risks must be carefully managed and mitigated by the regulatory framework to avoid moral hazards.The CBN will adopt a proportional approach to regulation of emerging technologies in consultation with the Financial Services Regulation Coordinating Committee (FSRCC) and the industry. FinTech and other digital solutions can be deployed to assure a smooth evolution to a safe, sound and effective financial system with the joint efforts of all stakeholders.


Lead Paper Presentation from the Perspective of a Regulator

Mr. Joshua Etopidiok, Director of Special Insured Institutions Department, NDIC

Mr. Etopidiok also started by making reference to the recently released survey report on Access to Financial Services by EFInA (2016), but with focus on the statistics for payments, savings, credit, insurance and pension. According to the report, the expected target for financially included persons by year 2020 for payments is 70%, while savings is 60%, credit 40%, insurance 40% and pension 40%. However, for year 2016, the figures for payments, savings, credit, insurance and pension were 38%, 36%, 3%, 2% and 5% respectively. The variance to the target year is 32% for payments, 24% for savings, 37% for credit, 38% for insurance and 35% for pension. While financial exclusion had a target of 20% by year 2020, as at 2016, it recorded 41.6% which resulted in a variance of 21.6%. Hence, the real challenge lies in how to bridge the gap positively.

Mr. Etopidiok then shared insights on the strategies to achieve financial inclusion. One of these revolves around capitalising on everyday transactions costs, using big data generated to service the poor and harvest the bottom of the pyramid savings. Also, there must be collaborative effort between the banks and technology companies. For instance, China now allows FinTech to provide credits to its customers. Banks may be under pressure to shrink their costs, but they are also expected to provide faster service at the same time. It is therefore in the best interest of the banks to embrace technology; and digital payment system is one of the approaches to achieve this objective. Some MfBs have now partnered with FinTech companies such as Piggy Bank NG and Lidya in Nigeria to offer these services just as M-PESA in Kenya is being adopted by many other countries.

Nigeria has been identified as a ‘Greenfield’ opportunity for the FinTech market to thrive with the use of data analytics, artificial intelligence, digital currencies and crowd funding. If indeed the MfBs leverage FinTech solutions, there would be increase in their sales, efficient service delivery which would translate to more micro-credits being given out, reduced operating costs, easier access to loans and lower interest rates.

Still on the EFInA Access to Financial Services 2016 Survey, the formally included segment increased from 45.4 million adults in absolute terms in 2014 to 46.9 million in 2016. This is an increase of 1.5 million adults who have access to Deposit Money Banks (DMBs), MfBs, Mobile Money, Insurance and Pension services. 60.40% of the total adult population

Mr. Joshua Etopidiok, Director, NDIC presenting the keynote paper from the perspective of a regulator


of 96.4 million own a mobile phone, while 58.30% of the adult population is less than 35 years of age and the female accounted for 49.20% of the sample size. Drawing on these findings, it can be inferred that the MfBs can leverage FinTech to develop products that would service the remaining 55.22 million unbanked adults with a focus on SMEs, Women and Youths.

In Uganda for example, the Desk officers meet with prospective customers without necessarily selling them financial products upfront, but rather provide them with free advisory services as a way to create buy-in of the customer. This is an option the Nigerian MfBs can look into.

It has been observed that many MfBs and other deposit-taking institutions continue to market their products to an already saturated market (i.e. other bank customers) rather than find new customers within the unbanked category. The 2.1% increase in financially excluded persons was also as a result of recession, loss of jobs, inflation and lower disposable income. Other factors include lack of trust in the formal institutions, low level of literacy and awareness, infrastructural challenges and high bank charges, among others.

In the light of the above, he made the following recommendations:

∙ Collaborative effort to understand the challenges of the stakeholders.

∙ Stakeholders’ support for an enabling environment through their national associations and platforms.

∙ Incentives for innovative products and services in collaboration with FinTech.

∙ Capacity building of staff in the usage of the IT platform to implement FinTech.

He concluded by leaving the participants with the following food-for-thought, which he expected the other paper presenters and panel discussants to address.

∙ What are the challenges confronting deposit-taking institutions (DMBs, MFBs, and PMBs) in the quest to mobilize deposits and create micro loans?

∙ What strategies are available to facilitate person-to-person and Business-to-Business payments? Can the transaction costs be further reduced?

∙ How can Agency Banking and ownership of mobile phones be utilized to expand the frontiers of financial inclusion towards achieving the 20% target by the year 2020?

A cross section of participants


Lead Technical Paper I

Mrs. Linda Quaynor, Managing Director, EFInA The Status of Savings Mobilisation and its Impact on Financial Inclusion from the Findings from EFInA A2F Surveys

Mrs. Quaynor focused on three areas, which are Savings Trend and Patterns in Nigeria, Impact of Savings on Financial Inclusion and Opportunities for Deepening the Usage of Microfinance Banks.

She reviewed the trend of gross savings as a percentage of GDP in Nigeria vis-à-vis other economies such as Brazil, Kenya, and Pakistan over the years. Although, Nigeria was trending above the curve in comparison with the other countries, but the issue lies in how much is being saved. According to the World Bank report, Nigeria saved N15.6 trillion in 2015 and in the last ten years the CBN has also implemented policies and programmes to improve savings mobilization. This notwithstanding, the result of the survey by EFInA indicates that Nigeria still lags behind in its financial inclusion initiatives. For instance, between 2014 and 2016, the proportion of financially excluded to total adult population increased from 39.7% to 41.6%.

It is important to also note that out of the 96.4 million Nigerian adult population, 65.5 million of them save (i.e. approximately about 68%) but in particular, 44.9% of the financially excluded adults are saving but in the informal sector. While among the adults who are formally included, 85.2% of them save. The question then is where are the financially excluded people located?

Going by the geo-political zones,

∙ The North West has 11 million people saving, but only 4 million are saving in the formal sector while the remaining 7 million are saving in the informal sector. Similarly, 33.3% of the adult population has cell phones. In other words, when Digital Financial services (DFS) products are being developed, the target market should focus around those with cell phones.

∙ In the North East, 7 million of the adult population are saving, but 5 million (almost 80%) are saving in the informal sector with a cell phone access of 47%.

∙ In the North Central, 10 million adults are saving, with 60% in the formal sector and 40% in the informal sector. Although, those that are saving in the formal sector are saving less compared to those in the informal sector who are saving

Mrs. Linda Quaynor, MD, EFInA, presenting the technical paper


more in the excluded space. Cell phone ownership is 62.2% and this infers a good market for DFS.

∙ In the South West, 14 million adults (with N208 billion) are saving in the formal sector, while 2 million (N89 billion) are saving in the informal sector. Cell phone ownership is high at 84.2%.

∙ In the South South, 12 million adults are saving and 8 million have access to N124 billion in the formal sector, while 4 million adults with N82 billion are saving in the informal sector. Cell phone ownership is 65%.

∙ In the South East, with a population size of 9 million, about 6 million save in the formal sector, while 3 million adults save in the informal sector. Cell phone ownership is 72.7%.

Based on the foregoing, there is a need to focus on the North Central, North East and North West because it has the highest adult population size and also the largest size of informal savings. Hence, the opportunities abound in these areas and MfBs should develop products and services for these groups of people. Mrs. Quanyor further explained the profile of the different categories of savers, deducing that the number of people that save at home and those that save in the financial institutions are almost the same. In addition, many of the savers indicated ease of use, proximity and access as key requirements in choosing their saving methods.

While the number of those that save with DMB continues to rise, the MfBs witnessed a decline between 2012 and 2016. This may suggest that MfBs are not effectively meeting the needs of customers. More so, the MfBs should be able to convert a good share of the over N200 billion deposits saved at home into the formal banking system and develop marketing strategies that would attract those that save at home and other informal places.

With regards to the impact of savings on financial inclusion, the correlation between savings and credit is not happening because the 40% target for credit is yet to be realised. As at 2016, credit recorded 3% of the financial inclusion target. In other words, if savings is encouraged, it would provide an opportunity for the extension of micro-credits to low income borrowers who typically lack collateral, steady employment and verifiable credit history.

The opportunities that abound cannot be over-emphasised and as such, the MfBs should leverage FinTech to provide digital financial services (DFS) to the outstanding 25.7 million adults that do not use formal financial services. Moreover, 43.3% have access to a mobile phone, and 67.5% have formal education. Therefore, the type of products designed should be customised and specific for the profile of the different customers and not a one-size-fits-all approach. Similarly, MfBs should explore the opportunities to bundle micro-savings products along with micro-insurance and micro-pension products to further deepen their offerings.


Technical Paper from International Special Guest

Mrs. Angela Wambugu, Associate Director of MicroSave Limited, Kenya Progress Report on AFOS Foundation Project on: “Enhancing Savings Mobilization, Mobile Money, Agency / Branchless Banking and Digital Money for MFBs in Nigeria”

Mrs. Wambugu expressed her appreciation to AFOS Foundation for the opportunity to partner in the savings mobilisation project. She invited her colleague Jacqueline Jumah, Digital Finance Expert, MicroSave to share Kenya’s success story on how it has deployed digital financial system to achieve its current 75% financial inclusion rate.

Ms. Jumah attributed the acceleration of Kenya’s financial services inclusion to the use of digital financial services. She explained that mobile money was introduced by the telecommunication company at a time when there were no guidelines and frameworks. And at that time, banks were also not allowed to offer financial services through third parties. The Central Bank of Kenya in 2011, then introduced the agent banking guidelines which allowed banks to provide financial services. It was the openness of the regulator, allowing both mobile network operators and banks to participate,that facilitated the enhancement of financial inclusion in the country.

She added that the Telcos followed the distribution model of the Fast Moving Consumer Goods companies to expand. The banks have leveraged this network to penetrate the rural and remote areas with their financial services.

Furthermore, she cited examples of Tanzania and Bangladesh. In Tanzania, the market is highly fragmented and they are very competitive in pushing their products, very cooperative as well as collaborative, also known as ‘co-opetition’. In Bangladesh on the other hand, they have very similar characteristics with Nigeria, in terms of population, size and digital finance guidelines. For instance, the regulations in Bangladesh states that DFS can only be pushed by banking models and the telecommunication company can

Mrs. Angela Wambugu, presenting her technical paper

Jacqueline Jumah of MicroSave, sharing the experience of other countries with DFS.


only come in to manage the distribution of the services. For Nigeria, the problem lies in how to harness these opportunities to further service those that are excluded in the financial space.

Mrs. Wambugu started her presentation by sharing insights about MicroSave and its different projects in digital finance in Africa. These include advisory and pilot review of MPESA in 2008, support to Equity Bank Kenya in rolling out agent banking 2011-2013, establishment of The Helix Institute of Digital Finance in 2013, and more recently roll out of Agent banking in Uganda and Nigeria, among others. The overall objective of the project Enhancing Savings Mobilisation is expected to facilitate the use of innovative financial services solutions in savings mobilisation as well as the development and deployment of shared savings product.

The concept around the savings product is to develop a savings culture through affordable and convenient channels for the masses and to help them achieve their lifestyle goals, while giving MfBs access to cheaper loanable funds.

She cited two cases; the PMJDY government-led initiative for micro financial inclusion in India. This savings product had about $5.9 billion deposits as at April 2016. However, caution must be exercised in terms of dormancy because customers have varied service needs. The other savings product known as Mzansi is equally a government-led initiative in South Africa. In this case, all the banks were instructed to deploy this product as a directive towards financial inclusion. And as such, there was no buy-in by all the operators compared to the PMJDY product where only selected banks deployed this service. More so, the channel of delivery through branches and use of tellers were costly.

Mrs. Wambugu shared the timeline for the next steps of the savings mobilization project, which is to be concluded by October 2017 and she also highlighted the various concerns on this initiative regarding regulatory reforms. However, some of the issues are industry related and these include the credibility and capability of the MfBs as well as knowledge of agent banking. To address these, there must be a change of mindset, change of public perception in particular to the name given to commercial banks as Deposit Money Banks (versus MfBs), among others.

In addition, she highlighted the regulatory reforms that can affect the initiative and these are:

∙ Clearing and settlement system.

∙ Licensing and regulations of MfBs.

∙ Access limitations for BVN registration.

∙ Cost limitations for DFS deployment.

She made the following suggestions for the regulators to consider:

∙ Include capable MfBs in NIBSS.


∙ Define special eligibility criteria for MfBs – governance, core capital requirements, liquidity requirements and the capital adequacy ratios.

∙ The process of granting access to NIBSS needs to be done incrementally upon attaining specific set targets.

∙ Public endorsement of MfBs by CBN and NDIC.

∙ Strengthen self-regulation through the National Association of Microfinance Banks (NAMB). CBN should support in the development of self-regulation guidelines.

∙ Consider external rating and badge of honour by associations, for solid, well governed and consistent MfBs.

∙ CBN to consider allowing network of larger MfBs to participate in the customer enrollment process.

∙ CBN to fast track the rollout of national electronic ID system.

∙ Shared technology platform as it may be expensive for individual MfBs to implement own platforms

∙ Shared agent network through the association, which can be managed by third party or possibly the MfBs can join resources to have their own agency network.

∙ Review cash deposit requirements.

∙ Abolish/reduce advertising fees on agent outlets.

In conclusion, Mrs. Wambugu emphasised the importance of a strong association that can engage with the regulators and also self-regulate its members, while ensuring capacity building among its association members. She further pushed for the MfBs to have sub-association/ sub-committee for the different tiers of MfBs as they all have their unique challenges.

Comments and Recommendations

∙ The operators should have a holistic survey to get a better understanding of what gives the customers trust in the MfBs.

∙ There should be an increase in the consumer awareness of MfBs.

∙ The regulators should carry out a public awareness on educating the people in rural areas about MfBs as this may boost the confidence of the customers in MfB.

∙ The credibility issue is market-led and as such the MfBs should review the quality of the service they offer as an industry.

∙ There is no law that restricts MfBs from BVN registration; it is an issue of capacity. The question is how many MfBs have the capacity to implement BVN registration.


Panel Discussion

The Moderator of the panel discussion was Mrs. Modupe Ladipo, Chairman, EFInA Board of Directors

The panel discussants were:

∙ Dr. Godwin Ehigiamusoe, Managing Director, LAPO Microfinance Bank Limited

∙ Mr. Akin Lawal, Managing Director, NPF Microfinance Bank Plc

∙ Mr. Guilluame Valence, Managing Director, Advans La Fayette Microfinance Bank

∙ Mr. Rogers Nwoke, Managing Director, Hasal Microfinance Bank Limited

∙ Mr. Tiko Okoye, Managing Director, Fortis Microfinance Bank Plc

Mrs. Ladipo gave a brief introduction of the theme of the symposium and emphasised that the purpose of the panel discussion was to assist MfBs move from cash-based banking to digital based platforms. Microfinance banks should start to invest in digital infrastructures such as mobile applications, internet, ATM cards and POS as this is the way forward in the 21st century. Drawing from some statistical compilations that are globally relevant for developing economies, she highlighted the following:

∙ 1.6 billion people will be newly included in the database management system

∙ $4.2 trillion in new deposits

∙ $3.7 trillion will account for an increase of 6% GDP boost by year 2025

∙ Creation of 95 million new jobs

∙ $110 billion annual reduction in government leakage

∙ $2.1 trillion in new credit

Furthermore, she pointed out the potential benefits for Nigeria if digital financial services are fully deployed and these are:

∙ 46 million people will be added to the formal financial sector

∙ 3 million new jobs

∙ 12.4% increase in GDP by 2025

∙ $2 billion will be saved in government leakage

∙ $57 billion in new credit

∙ $36 billion in new saving

Mrs. Modupe Ladipo, Chairman, Board of Directors, EFInA, moderating the panel discussion


∙ Cost savings on account will be between 65% - 75%

∙ Cost savings on transactions will be between 90% - 95%

∙ Overall cost savings would be between 80% - 90%

To set the tone for discussion by the panellists, Mrs. Ladipo highlighted three major requirements for digital financial services to work in Nigeria as:

1. Widespread digital infrastructure

2. Dynamic financial service regulation

3. Products people prefer to existing products.

She then opened the floor for the panellists to discuss the challenges and opportunities faced by their individual banks in switching to digital financial services.

Dr. Godwin Ehigiamusoe (represented by Mr. Elijah Osadebamwen)

Mr. Osadebamwen noted that the use of technology by MfBs to deliver efficient services to customers is inevitable. He then shared the experience of LAPO’s transition when majority of its operations were manually operated. It was difficult to implement without errors, but eventually LAPO had all its branches interconnected to the online automated system. The transition process was quite challenging because it required huge investment in technology to allow the operations in all their 200 branches be technologically driven. It was the lessons learnt from that experience and use of the right software that was used to develop the additional 237 branches that LAPO currently has.

In spite of the success achieved, the bank still experiences downtime periods especially in remote areas where there are little or no networks. In addition, Mr. Osadebamwen stressed that the high cost of the initial investment in digital financing may strongly affect the smaller microfinance banks (Unit MfBs). On the other hand, there is the challenge of network connectivity and infrastructure, particularly in remote areas where the network is poor. Until these issues are resolved, using FinTech to deliver DFS will be daunting.

Going forward, he suggested the need for consumer education and awareness by regulators and the operators to those that reside in the rural areas so as to boost financial inclusion. Also, if the opportunity in digital banking is harnessed with agent banking, it would increase savings mobilisation as well as lower operational cost.

Mr. Valence Guillaume

One of the major challenges faced by microfinance banks in the use of digital financial services is the issue of trust and confidence in the sub-sector by the public. He further

Mr. Elijah Osadebamwen, Director, LAPO MFB, making his contribution to the panel discussion


pointed out that Advance La Fayette MfB like other MfBs faces the problem of unfair competition with the DMBs because the bank needs to go through them for some of their services, like instant transfer. This therefore raises the issue of service reliability as well as increasing cost. Another challenge the bank faces is how to strike a balance between the bank’s financial objectives and social objectives.

Digital financial service is very expensive to implement and it can cost as high as €50,000, which will likely have financial implications for the bank’s financial standing. In addition, the inability to build a network of agents and the going concern issues of some of these agent networks equally pose a challenge to the bank.

Mrs. Ladipo (Moderator)

To address the matter raised by Mr. Guillaume, she suggested that the regulators should disseminate information on active agents and the areas they are located.

Mr. Akin Lawal (represented by Mr. Jude Ohanehi)

NPF Microfinance Bank began operations in 1993 and has grown to 28 branches nationwide. The bank has not done much in digital financial services because of the huge cost of investment, non-availability of ICT infrastructure, lack of technically skilled workforce, the profile of the bank’s customers, high rate of poverty and national insecurity.

The bank has reduced its concentration risk by offering financial services not just to police personnel, but to civilians in the last ten branches opened by the bank. And these branches are now located outside police barracks.

NPF MfB will collaborate with MicroSave on agent and branchless banking, as it hopes to begin providing digital financial services soon.

Mr. Rogers Nwoke

The use of technology has been built into the processes of Hasal MfB since its inception in 2008. The bank engaged the services of InterSwitch, as it was convinced that digital banking was the future of microfinance and operational risks can be better managed on the digital platform. All the branches of the bank are connected real-time online 24/7.

Mr. Guillaume Valence MD, ADVANS MfB making his contribution to the panel discussion

Mr. Jude Ohanehi, Director, NPF MfB Plc, responding during the panel discussion


The bank faced impediments in exploring DFS and other FinTech solutions. These included poor infrastructure and development, fear of fraud, low level of financial literacy, high cost, regulatory problems which included forcing the banks to operate cash centres (branches) instead of interaction centres which are more profitable and cost effective, problems of after sales support to all microfinance banks in Nigeria, settlement issues, switching issues, and high cost of recruiting agents, to mention but a few.

These challenges notwithstanding, DFS brought opportunities to the bank and these include an increase in deposit mobilization that grew from N6.1 million in year 2010 to N215 million in 2014. Similarly, the bank changed its banking application and this resulted in an increase of N411 million in 2011 to N10.2 billion in year 2016 in electronic transfers. Over 100 POS terminals of the bank are in different places and Hasal MfB had gone live on NIBSS.

He suggested that the MfBs should be allowed to engage in similar services as the DMBs. However, regulatory check should be on the size or volume of the transactions MFBs can engage in.

Mr. Tiko Okoye

Fortis MfB remains the most digitalized bank in the microfinance subsector, as all the staff of the bank have FORTIS branded ATM cards, which creates confidence in clients. The bank has 64 cooperative branches nationwide, and 14 branches in Abuja. Savings as a credit product is driven through the MPOS and cooperative branches.

DFS is quite expensive and this reduces the profitability of the bank in the short term, requiring that it should be properly aligned with the bank’s core banking application. The need for Technology risk to be anticipated and mitigated was also highlighted, as this can cause reputational risk if not well managed.

Mr. Okoye suggested that the government should encourage import substitution by providing incentives for producers of Automated Teller Machines (ATM) in Nigeria. The need for microfinance banks to gain public trust requires support of the regulators just as commercial banks are being supported so as to outlive their founders.

Mr. Rogers Nwoke, MD/CEO, Hasal MfB Ltd during the Panel proceedings as a discussant

Mr. Tiko Okoye MD/CEO, FORTIS MfB Plc responding to questions


Interactive Session with the Panel

Questions & Answers:

∙ Question: Mrs. Ladipo (Moderator) asked Mr. Olubokola Akinwunmi of CBN why some microfinance banks got their licenses revoked, and when depositors in those banks will have access to their money.

Response by Mr. Olubukola Akinwunmi (CBN, Banking and Payment Systems)

NIBSS is ready to give services to microfinance banks and that has been done through mobile money. There is need for collaboration and cooperation on shared agency network and shared infrastructure by microfinance banks in Nigeria.

Mr. Akinwunmi assured the participants that MfBs can leverage the two approved ‘super agents’ by CBN. Telcos will also be licensed soon, especially those that are considerably strong and once they are licensed, the Bank will create awareness.

∙ Question: Has collaboration on shared services been successful for the commercial banks?

Response by Mr. Akinwunmi (CBN)

Online banking platform is a success story today as a result of shared platform by commercial banks. Banks should be ready to collaborate, as shared services and shared data centre reduce operating cost.

∙ Question: What is the comparison between the activity level on a shared platform and individual platform?

Response by Mr. Akinwunmi (CBN)

Using the mobile money platform to illustrate, the shared platform is about using same infrastructure, but also collectively agreeing terms and ideas among themselves.

Response by Mr. Rogers Nwoke

There should be a framework for MfBs so that they can depend less on commercial banks.

∙ Question: Will training not be a challenge in the digital era?

Response by Mrs. Wambugu

MicroSave runs training programmes on agency networks and MfBs can actually subscribe to this. Also, there is no need to force any bank into joining MITC if they cannot see the benefit attached to it.

Mr Olubukola Akinwunmi of CBN, answering questions


MfBs should explore opportunities in partnership that will provide funds for all and also result in profit sharing. Licensing of super agents should be based on distribution and not technology.

Response by Mrs. Martins

The group training is not compulsory for microfinance banks. It is voluntary and would be beneficial to all the parties involved.

∙ Question: How can the cost of deploying DFS be managed with regulatory limits on assets?

Response by Mrs. Martins

DFS is better done through shared services, which is far cheaper at a monthly cost of only N23,000.

∙ Comment by Femi of Inlaks:

There are significant benefits in shared platform, coming from Inlaks’ experience as a driver in the ICT industry.

∙ Comment by Sammy:

Collaboration will not work unless microfinance banks are unified, as has happened in the case of NAMB. The Nigerian Microfinance Platform should tread with caution.

Response by Mr. Nwoke

Shared platform will be a very big success if MfBs collaborate

Response by Dr. Oluyemi

NDIC can provide soft loans to microfinance banks having liquidity issues and therefore, MfBs can leverage this opportunity. MfBs should participate in the shared platform and NDIC has provision for insurance for mobile money operators.

∙ Comment by Mrs. Martins

Consolidation in the microfinance subsector remains important. Perhaps entry barriers are too low, meaning the entire industry needs to be restructured.

Mr. Anate Joseph of Triple A MfB making a contributionMr. Olufemi Muriano, answering questions

on the proposed CBN shared IT platform


Mr. Nwoke should develop a concept paper on the benefits of interaction centres instead of cash centres (branches) for MfBs.

∙ Mrs. Ladipo (Moderator) requested each discussant to state one contribution their banks would make over the next one year.

∙ Mr. Guilluame, Advans La Fayette Microfinance Bank: Collaboration through the microfinance platform

∙ Mrs. Quanyor: EFInA: Expanding through innovation

∙ Mrs. Wambugu, MicroSave: Capacity building

∙ Mr. Osadebamwen, LAPO Microfinance Bank Ltd: Take agent banking to all Nigerian states

∙ Mr. Ohanehi, NPF Microfinance Bank Plc: Increase partnership with other MfBs

∙ Mr. Nwoke, Hasal Microfinance Bank: Collaboration with microfinance banks and registered association

∙ Mr. Okoye, Fortis Microfinance Bank Plc: Achieve financial inclusion by 100% in one year and 400% by 2021

∙ Mrs. Martins, CBN: Listen and support

∙ Mr. Etopidiok, NDIC: Encourage operators to do the right things

Mrs. Ladipo (Moderator) brought the session to a close and reiterated the following mentioned points:

1. The competitors of Microfinance banks should not be deposit money banks

2. Collaboration is key

3. MfBs should have a platform to push grievances to government.

Enagaged participants


Vote of Thanks

The vote of thanks was given by Mr. Rogers Nwoke, who thanked everyone present at the event and further expressed deep appreciation to the Deputy Governor, CBN, Dr. Joseph Nnanna who was represented by Mrs. Tokunbo Martins. He extended his gratitude to the MD/CEO, NDIC, Alhaji Umaru Ibrahim; the Director, OFISD, Mrs. Tokunbo Martins; and the Director, Special Insured Institutions Department, NDIC, Mr. Joseph Etopidiok all of whose support could not be quantified.

Special thanks also went to the EFInA team, MicroSave, all the panel discussants, the AFOS Foundation, Mrs. Tutu Ogunnaike, rapporteurs, the MC, Mr. David Adelana and the organising committee. He urged every participant to explore, collaborate and form a strong partnership for greater success.

Mr. Rogers Nwoke giving the vote of thanks on behalf of the Nigerian Microfinance Platform


Chairman’s Closing Remarks

The Deputy Governor (FSS), Central Bank of Nigeria: Dr. Joseph Nnanna

Mrs. Tokunbo Martins gave the closing remarks on behalf of Dr. Joseph Nnanna. In her short remarks, she expressed that the programme has been worthwhile and every participant should go out with much determination to embrace all that have been decided upon.

The symposium was officially declared closed by 3:50pm.

Appendices


Appendix A

THE NIGERIAN MICROFINANCE PLATFORMSupported by

Program of Events08:30 - 09:00 Registration of Participants

Arrival of discussants, Guests of Honour, Lead paper presenters/Special Guest of Honour, Keynote Speaker and the Chairman.

09.00 – 09.10 Introductions/Recognitions by the Master of Ceremony

Mr. David Adelana, Principal Manager, Central Bank of Nigeria (CBN)

09.10 – 10.00 Opening Statements by the ChairmanDr. Okwu Joseph Nnanna, Deputy Governor, Central Bank of Nigeria

Messages:Alhaji Umaru Ibrahim,MD/CEO, Nigeria Deposit Insurance Corporation (NDIC)

Mr. Hans-Joachim Maurer,MD/CEO AFOS Foundation – Germany

Senator Rafiu Ibrahim Adebayo,Chairman, Senate Committee on Banking, Insurance and Other Financial Institutions

Senator Dada Joseph GbolahanVice Chairman, Senate Committee on Public Account


10:00 – 10:30

Convener’s Address:

Regulatory challenges and policy plans for enhancing the exploration of Digital Financial Services and other Fintech Solutions for Savings Mobilization by Microfinance Banks in Nigeria

Mrs. Tokunbo Martins, Director, Other Financial Institutions Supervision Department (OFISD) CBN and Convener of the Nigerian Microfinance Platform (NMP)

10:30 – 11:00

11:00 – 12:00

Keynote Paper from the Perspective of a Regulator:

Imperative reforms for the safeguard of deposits and management of abuses to ensure optimum exploration of Digital Financial Services (DFS) and other Fintech Solutions for Savings Mobilization by Microfinance Banks

Mr. Joshua Etopidiok, Director, Special Insured Institutions Department, Nigeria Deposit Insurance Corporation (NDIC)

12:00 – 12:30 Tea/Coffee Break

12:30 – 1:00 Technical Paper:The status of Savings Mobilization and its impact on Financial Inclusion in NigeriaMrs. Linda Quaynor, Managing Director of EFInA

Technical Paper from International Special Guest:Preliminary outcomes of the project on “Savings Mobilization, Mobile Money, Agency/Branchless Banking and Digital Money for Microfinance Banks in Nigeria”.Mrs. Angela Wambugu, Associate Director, MicroSave Ltd., Kenya

1:00 – 2:30 Panel Discussion:Impediments to the exploration of Digital Financial Services and other Fintech Solutions for Savings Mobilization by Microfinance Banks in Nigeria

Moderator• Mrs. Modupe Ladipo, Chairman, Board of Directors, EFInA

Discussants• Dr.GodwinEhigiamusoe,MD/CEO,LAPOMfBLtd.• Mrs.BunmiLawson,MD/CEO,ACCIONMfBLtd.• Mr.RogersNwoke,MD/CEO,HasalMfBLtd.• Mr.GuillaumeValence,MD/CEO,AdvansLaFayetteMfB• Mr.TikoOkoye,MD/CEO,FortisMfBPlc• Mr.AkinLawal,MD/CEO,NPFMfBPlc.


2:30 – 3:00 Question & Answer Session

3:00 – 3:20 Presentation of summary of Key Symposium outcomes and ‘takeaway tasks’/CommuniquéMrs. Tutu Ogunnaike, Former Deputy Director, OFISD-CBN

3:20 – 3:35 Presentation of plaques and letters of appreciation to presenters and Guests

3:35 – 3:45 Vote of Thanks Mr. Rogers Nwoke, MD/CEO Hasal MfB – on behalf of Nigeria Microfinance Platform

3:45 Closing remarks by ChairmanDr. Okwu Joseph Nnanna, Deputy Governor, Central Bank of Nigeria

4:00 Lunch

Appendix B

List of OfficialsS/No. Names Position

1. Dr. Joseph Nnnanna Deputy Governor, CBN

2. Mrs. Tokunbo Martins Director, Other Financial Institutions Supervision Department (OFISD)

3. Alhaji Umaru Ibrahim MD/CEO, Nigeria Deposit Insurance Corporation (NDIC)

4. Mr. Joshua Etopidiok Director, Special Insured Institutions Department, Nigeria Deposit Insurance Corporation (NDIC).

5. Mr. Hans Joachim Maurer MD/CEO, AFOS Foundation

6. Mrs. Linda Quaynor Managing Director of EFInA

7. Mrs. Angela Wambugu Associate Director, MicroSave Ltd, Kenya

8. Mrs. Modupe Ladipo Chairman, EFInA Board of Directors

9. Dr. Godwin Ehigiamusoe, Managing Director, LAPO Microfinance Bank Ltd

10. Mr. Tiko Okoye Managing Director, Fortis Microfinance Bank

11. Mr. Rogers Nwoke, Managing Director, Hasal Microfinance Bank

12. Mr. Guilluame Valence, Managing Director , Advans La Fayette Microfinance Bank

13. Mr. Akin Lawal, Managing Director, NPF Microfinance Bank Plc

14. Mrs. Tutu Ogunnaike Former Deputy Director, OFISD-CBN


Appendix C

List of ParticipantsS/No. Names Organisation

1 Sogbesan Ayoola AB MfB

2 Aminu Abdullahi Abokie MfB

3 Ojuh Peter ABUCOOP Mfb

4 Oladele Olasehan ABUCOOP MfB

5 Aminu Umar ABU-MfB

6 Enyi Paul Accion MfB

7 Arowojolu Abiodun Accion MfB

8 Bernhard Vester AFOS Foundation

9 Kenneth Achu AFOS Foundation

10 Mary Samuel-Ipaye AFOS Foundation

11 Funmilayo Akinwale AFOS Foundation

12 Alaba Odifa Atlas MFB

13 Odenigbo Joe Atlas MfB

14 Jude Onuoha Atlas MfB

15 ‘Laide John BAA Consult

16 Adesoye Paul BAA Consult

17 Barr. Peter Oiwo Boji Boji MfB

18 Ganiyu A. Isiaka Bunkasa MfB

19 Bernard Nwobodo Business Suport MfB

20 Akinlade Idowu CBN

21 Olatunde Agbeja Fehintola CBN

22 Ekpo Bassety-Duke CBN

23 K.A.Olatinwo CBN

24 O.L.Owolabi CBN

25 Akinwunmi O.A. CBN

26 Fatokun Dipo CBN

27 Adelana David CBN / MC

28 Idongesit Emenyi Cornerstone Insurance Plc

29 Francis Alawari Cosmopolitan MFB

30 Aluko Ayodeji CRC Credit Bureau

31 Khanoba Collins Crossover MfB

32 Helen Amromaja FITC

33 Joseph Onyeabor Fortis MfB

34 Samuel Hezekiah Fortis MfB


35 Thompson Jombai Fortis MfB

36 Aress Swile Abutu GIZ

37 Kikelomo Collins - Chibele GIZ

38 Valentine Whensu Global

39 Hauwa Tliga Kassan GOWANS

40 Yado Philip A. Hamda Mfb

41 Cynthia Sai Hasal MfB

42 Badmus Ruskiyat Hasal MfB

43 Adedapo Adebimpe Hasal MfB

44 Abraham Blessing Hasal MfB

45 Ada Anya Hasal MfB

46 Benjamin Mapac Hishlard MfB

47 Janet Odidi Obuotor Hitech Gadgets Ltd

48 Olufemi Muraino Inlaks

49 Jimoh Fatai Inlaks

50 Olanipekun Morenike Inlaks

51 Giwa, O.A Inlaks

52 Gabriel Agbo Jamis MfB

53 Asabe Abdullahi Josad MfB

54 Akposyouwi S.M Kedpoly MfB

55 Adetokun Adedayo LAPO MfB

56 Igiewe Efosa E. LAPO MfB

57 Iyoha Blessing LAPO MfB

58 Osadebainwen Elijah LAPO MfB

59 Kunle Shittu LAPO MfB

60 Samuel Nnoemenan LAPO MfB

61 Utoware Blessing LAPO MfB

62 Ibrahim Mohammed Leadership

63 Emmanuel Michael Letshego MfB

64 TAT Danjuma Light MFB

65 Kazeem O.A.R Microcred

66 Omar Niaz Microcred

67 Jacqueline Jumah MicroSave Consulting

68 Yusuf Gyallesu NUT Endwell MfB

69 Simon L. Arduhur Mwaghavul MfB

70 Ogbu Oche Emmanuel NAMB

71 Imagie Elochukwu NAMB


72 Nasiru A. Baba NAMB

73 Eddy Orok NAMB FCT

74 Shikin N. Caleb NAMB HQ

75 Eld Femi Jegede NAMB Oyo

76 Adekanmbi Amosu NAMB Oyo

77 Jibrin M. Usman NAS MfB

78 Kayode Oyedeji National Assembly

79 S.A Oluyemi NDIC

80 J.J Eto Pidiok NDIC

81 D.N. Amuzie NDIC

82 Ayodele Ariyo News Direct

83 Ramat Isa Njenwinze

84 Tizhe J. K NPF MfB

85 Ohanehi Jude NPF MfB

86 Sunday Zovoe NPF MfB

87 Ibyodinina Vera NPF MfB

88 Fatima Olajumoke NPF MfB

89 Ufuoma Eghwerehe OIKO Credit

90 Ejembi Bernard Ijoh Otukpo MfB

91 Christian Aghaegbuna Safe Haven MFB

92 Chioma Mordi SCGN

93 Anate Joseph Triple A

94 Abimbola Olaboedi Walle MfB

95 Kpedi Justina Wetland MfB

96 Stephen M. Somo

97 Angela Wambugu MicroSave


Appendix D

List of SponsorsS/No. Organisation

1. ACCION Microfinance Bank Limited

2. Advans La Fayette Microfinance Bank Limited

3. AFOS Foundation

4. B. Adedipe Associates Limited

5. Fortis Microfinance Bank Plc

6. Hasal Microfinance Bank Limited

7. LAPO Microfinance Bank Limited

8. NPF Microfinance Bank Plc

Appendix E

List of Organising Committee MembersS/No. Name Organisation

1. Ifeoma Akpojiyovwi ACCION MfB

2. Sixtus Ekeocha ACCION MfB

3. Michael Olatunde ADVANS LAFAYETTE MfB

4. Achu Kenneth AFOS

5. Mary Samuel-Ipaye AFOS

6. Funmilayo Akinwale AFOS

7. Oni Taiwo AFOS

8. Samuel Jesushola FORTIS MfB

9. Lilian Bassey HASAL MfB

10. Kunle Shittu LAPO MfB

11. Fatima Olajumoke NPF MfB

Appendix F

Rapporteur Team S/No. Name Organisation Role

1. Dr. ‘Biodun Adedipe BAA Consult Editor-in-Chief

2. Olaide John BAA Consult Rapporteur

3. Paul Adesoye BAA Consult Rapporteur


Appendix G

Communique Team S/No. Name Organisation

1. Adetutu Ogunnaike Consultant

2. Samuel Jesushola FORTIS MfB

3. Lilian Bassey HASAL MfB

Appendix H

Media TeamS/No. Name Organisation

1. Ifeanyi Onueba Punch

2. Lucy Ladidi Elakpo Guardian

Appendix I

List of AcronymsS/No. Acronym Definition

1. ATM Automated Teller Machine

2. CAC Corporate Affairs Commission

3. CBN Central Bank of Nigeria

4. DMB Deposit Money Bank

5. DFS Digital Financial Services

5. EFInA Enhancing Financial Innovation and Access

6. ICT Information and Communications Technology

7. MfB Microfinance Bank

8. NAMB National Association of Microfinance Banks

9. NCC Nigerian Communications Commission

10. NDIC Nigeria Deposit Insurance Corporation

11. NIBBS Nigeria Inter-Bank Settlement System Plc.

12. NMP Nigerian Microfinance Platform

13. NPF Nigeria Police Force

14. OFISD Other Financial Institutions Supervision Department

15. POS Point-of-Sale

16. SEC Securities and Exchange Commission

17. AML/CFT Anti-Money Laundering and Counter Financing of Terrorism

18. KYC Know Your Customer

19. MSME Micro, Small and Medium Enterprises

20. API Application Programme Interface

21. BVN Bank Verification Number

22. IT Information Technology

23. GDP Gross Domestic Product

24. FSS Financial System Strategy


Appendix J

Opening Address

Dr. Okwu Joseph Nnanna, Deputy Governor, Central Bank of Nigeria

CHAIRMAN OPENING ADDRESS

on the occasion of

THE 3RD ANNUAL SYMPOSIUM OF THE NIGERIAN MICROFINANCE PLATFORM ON MAY 24, 2017

∙ Chairman, Senate Committee on Finance, Senator Rafiu Ibrahim Adebayo

∙ Directors of CBN, OFISD and NDIC, SIID

∙ Managing Directors of Microfinance Banks

∙ Distinguished Paper Presenters and Panelists

∙ Other Invited Guests

∙ Members of the Press

∙ Ladies and Gentlemen

all protocols duly observed.

It is an honor and privilege for me to be here at this Symposium and to perhaps, chair the event.

It is common knowledge that the microfinance bank sub-sector has evolved since the launching of the Microfinance Policy in 2005. The potentials are enormous and so are the challenges, daunting. As regulator and supervisor of the sub-sector, the CBN has continued to play a critical role in ensuring the stability and soundness of the entire financial system, of which the sub-sector, plays a major role. Microfinance, by expectation is expected to cater for the bottom of the pyramid persons and assist the lower-end of the market to cultivate banking habit, provide financial and non-financial services to this category of individuals and by so doing, reducing the poverty level at the grassroots. This is expected to be performed with all sense of responsibilities, considering that microfinance banks should be run profitably and sustainably.

The theme of this year’s symposium, “Enhancing Savings Mobilization through Mobile Money, Agent/Branchless Banking and Digital Money and Other Fintech Solution to Achieve Financial Inclusion” the third in the series, could not have come at a better time. Virtually all facets of our lives had been touched or influenced by the advent of technology in a very significant way. While the Nation tries to achieve the set target of reducing the number of financially-excluded persons, it is paramount to continually engage technology to assist in bridging this gap. Indeed, technology is changing the ways in which banking


services are being offered and delivered. The combined effect of mobile money with the active involvement of the telcos, the usage of business correspondents and even, the so called ‘cryptocurrency’ despite the little or no-awareness on its implications, amongst other new initiatives powered by information technology, could not be waived aside.

We are moving from debit advices to SMS alerts, local server-based storage to cloud-computing, visiting bank branches to drawing cash at ATMs, filling transfer forms to wiring cash vide USSD codes and/or online apps, and many more! While there are tremendous benefits owing to the use of fintech solutions to banking, there are considerable downsides too. Very recently, the media was inundated with a virus known as ‘Ransomware’ which could only be possible due to the interconnectivity between various technological gadgets we use today. This and many more, are challenges which the increasing use of technology has brought to our doorstep. As we have embraced these technologies though, we should make it a point of duty to always seek for ways of protecting the banks’ assets from breaches.

It is in the light of these that regulators and supervisors should continually study these channels and/or products that could have very high impact on how banking businesses are run, proffer advices and issue regulatory policies to guide how individual banks and stakeholders deploy these tools. It is my firm belief that the array of industry specialists and experienced microfinance bankers that had been lined up to share their very useful insights into this all-important theme would do sufficient justice to it.

On a final note, I want to assure you that the CBN will continue to hold this sub-sector as vey key and important, promote its uniqueness and support all laudable initiatives within it, to ensure a virile, strong and stable financial system in the interest of the populace. We are at the CBN are looking forward to continue this co-operation and collaboration with sector participants and further contribute to the strengthening of the financial sector in Nigeria.

Having said this, I wish all participants a very successful symposium. Thank you very much and may God bless you all.


Appendix K

Opening Statement

Senator Prince (Dr) Gbolahan Dada, Vice Chairman, Senate Committee on Public Account

PROTOCOLS

The Organisers of this event,

Distinguished Senators here present,

Invited Guests,

Gentlemen of the Press,

Members of the Public,

Ladies and Gentlemen,

Other protocols duly observed.

I consider it a great honour and privilege to be in your midst today. I congratulate the Microfinance Platform for organizing this third annual symposium.

I have gone through the issues to be addressed by various experts in this symposium. I am convinced that we are all going to be more educated than we were at the end of this symposium.

While wetting my appetite to learn from our experts on the topic of this symposium titled “Enhancing savings mobilization through mobile money, agent/branchless banking and digital money and other fintech solution to achieve financial inclusion”, I stumbled on something which I would like to pass across.

There is a need to invest heavily in financial technology otherwise called fintech. We also need to address the issue of Data security because of the threats of hacking and the need to protect sensitive consumer and corporate financial data.

In 2014, it was reported that in Europe, $1.5billion dollars was invested in fintech companies with London-based companies receiving $539 million, Amsterdam-based companies received $306 million and Stockholm-based companies received $266 million in investment.

In Nigeria, I doubt if we have any statistics on the amount invested in fintech companies. I urge participants in this symposium to ensure that there is a change in this story in the coming years.


As I close, I wish to bring our attention to key findings of 2016 PWC Global Fintech report. The reports states as follows:

∙ 95 per cent of bankers believe that some of their business will be given up to FinTech players in the coming years.

∙ 67 per cent of respondents believe FinTechs will put pressure on margins.

∙ 59 per cent of respondents are concerned about losing market share.

∙ 53 per cent of those surveyed fear higher levels of customer agitations.

∙ 75 per cent of respondents said fintech will have most important impact on increased focus on the customer.

∙ 56 percent of respondents recognize the importance of distributed ledger technology (i.e., “blockchain”).

∙ 57 per cent are unsure how to respond.

I hope and pray that this symposium will give us a road map on how to utilize all the information we shall acquire to transform and influence the growth of Microfinance Banks in the country.

Once again, I welcome all of us to this symposium. I wish all of us happy deliberation.

Thank you and God bless.

Slides of Keynote Paper


Appendix L

Convener’s Address

Mrs. Tokunbo Martins, Director, Other Financial Institutions Supervision Department {OFISD}, CBN; Policy Plans for Enhancing Digital Financial Services for Savings Mobilization by MFBs


Appendix M

KEYNOTE ADDRESS BY DIRECTOR, SPECIAL INSURED INSTITUTIONS DEPARTMENT, NIGERIA DEPOSIT INSURANCE CORPORATION AT THE THIRD ANNUAL SYMPOSIUM OF THE NIGERIAN MICROFINANCE PLATFORM ON 24TH MAY, 2017

Protocol A Customer’s Journey is the Path the customer travels to satisfy their needs

and wants and will typically consist of several separate processes. The Theme “Enhancing Savings Mobilization Through Mobile Money, Agent/Branchless & Other Fintech Solution To Achieve Financial Inclusion” is very apt. Especially coming at the time EFina has just released its 2016 Report on Financial Inclusion.

1.0 Overview Of Strategies In Achieving Financial Inclusion Financial inclusion revolves around capitalizing on everyday transaction costs,

using big data generated to service the poor and harvesting the Bottom of Pyramid Savings.

Ask Bank Supervisors and Operators what has changed most in the past decade, top of their list will be regulations. Such regulations include Stress Tests, Capital threshold, Return on Equity, Cost Control Measures and Stricter Lending. Banks grumble about a surfeit of Rules as well as Capital requirements.

For instance, Dodd Frank Act (2010) which recast American Financial Regulation runs about 848 pages. The Dodd Frank Act thickened the “spaghetti soup”. It abolished but created two more institutions, Consumer Financial Protection Bureau (CFPB) and Financial Stability Oversight Council. Complaints about bureaucracy are heard far beyond Wall Street.

About 5,000 Community Banks (CBs) in the USA, equivalent of Nigerians MFBs say regulations are impacting revenues and restricting Loans creation. Besides, the CBs lack skill, the credit risks are locally concentrated and they face competition not only from bigger banks but also from online lending.

2.0 Relationship Between Banks & Technology Companies Becoming Increasingly Collaborative

In 2015, a paper published online under the name of Satoshi Nakomoto discussed and advocated a form of electronic cash which people could pay one another without going through banks. This was through “Bitcoin” riding on “Block Chain Technology”. Banks had to adapt to this creative disruption.

Smart phones and less visibly, Cloud Computing have transformed customers’ daily lives and the use of money.


Banks cannot ignore Fintech, rather both have to collaborate. For instance, Peer to Peer market place lending (Lending Club & SOA, America) and Rate Setter in Britain (Connect Lenders and Savers).

Britain’s Market Invoice allows small companies to borrow against Account Receivables. Recently, Office of the Comptroller of Currency, USA proposed giving special Licences to Fintech.

∙ China is keying into allowing Fintech to provide Credits to its customers.

∙ Banks & Fintech should positively embrace each other. Banks are under pressure from Supervisors and Shareholders to reduce costs. Customers and other Stakeholders expect banks to deliver their services faster. Banks know it is better to be first rather than being at the rear.

∙ Digital Payment System appears the right approach to achieve the Stakeholders’ expectation.

∙ In recent times, a number of MFBs in Nigeria have started to partner with Fintech companies. Piggy Bank NG, a Fintech Start-up, is partnering with MFBs to help Individuals save towards a target. The company has automated the savings process, making it easier for individuals to conduct savings just by uploading their Card Details. Also, Lidya, a Stand-alone Fintech company has attracted more than 20,000 small businesses. Instafin Fintech has enabled MFBs, Cooperatives & Credit Unions and presently serving about 650,000 clients.

∙ M-PESA, Kenya has since been extended to offer loans and savings products and can be used to disburse salaries or pay bills, which saves users further time and money (because they do not need to waste hours queuing up at the bank). One study found that in rural Kenya, households that adopted M-PESA, incomes increased by 5-30%. In addition, the availability of a reliable mobile-payments platform has spawned a host of start-ups in Nairobi, whose business models build on M-PESA’s foundations. Mobile-money Growth in other Countries has been held up by oppositions from Banks and Regulators and concerns over Money-Laundering. Despite the challenges, M-PESA is doing well in other countries, including Tanzania and Afghanistan, and last month it was launched in India. At the same time, operators in some other countries are doing an increasingly good job of imitating M-PESA. Some of the factors behind Kenya’s lead cannot be copied due to certain peculiarities; but many of them can, which means it should eventually be possible for other countries to follow Kenya’s pioneering example.

3.0 Fintech & Banks In Nigeria: The Journey So Far

∙ Digitization, Settlement and Fintech Market Segment - Nigeria identified as a “Greenfield” opportunity.

∙ Data & Analysis


∙ Artificial Intelligence

∙ Payments

∙ Digital Currencies

∙ Crowd Funding

4.0 Opportunities In Fintech Collaboration∙ Enhancing Value Proposal & Driving Sales

∙ Enhancing “Be Where Your Clients Are” to serve them better

∙ Reducing Operating Costs

∙ Easier Access to Loans

∙ Lower Interest Rates

5.0 EFina Access To Financial Services 2016 Survey In 2016, Formally Included Segment increased from 45.4 million adults (2014) to

46.9 million (2016), an increase of 1.5 million adults who have access to DMBs, MFBs, Mobile Money, Insurance and Pension Services.

The finding revealed that 40.1 million (adults) representing 41.6% are financially excluded.

60.40% - own Mobile Phones 61.90% - Rural 58.30% - Under 35 Years 50.80% - Male 49.20% - Female 19.10% - rely mainly on Farming

Source: EFina


∙ Opportunities- Large number of unbanked, not just BOP (Bottom of the Pyramid).

- Develop a menu of financial products to attract 55.22 million Adult user of mobile phones.

- Focus on SMEs.

- Focus on Women and Youths (underserved) to reverse loss of productivity.

6.0 Observed Emerging Trends∙ MFBs and Other Deposit-Taking Institutions continued to focus on population

that already had some level of financial stability.

∙ 2.1% increase in financially excluded due to (effect of recession, loss of jobs, inflation and lower disposable income).

∙ Shrinkage Access to Formal Institutions as a result of:

- lack of trust

- less income to save

- low level of literacy and awareness

- infrastructural challenges

- high bank charges

- lack of understanding of banking terms

- long queues

Projections Towards Achieving 20% Financial Exclusion Target By 2020

Focus Areas Target By 2020 2012 2014 2016 Variance To 2020 Target

Payments 70% 20% 24% 38% 32%

Savings 60% 25% 32% 36% 24%

Credit 40% 2% 3% 3% 37%

Insurance 40% 3% 1% 2% 38%

Pensions 40% 2% 5% 5% 35%

Financial Exclusion

20% 39.7% 39.5% 41.6% 21.6%

Source: EFina (2016)


7.0 Way Forward∙ Collaborative effort to understand the challenges of the Stakeholders (Research).

∙ Supporting Stakeholders Linkages for an enabling environment (Advocacy).

∙ Providing incentives for innovative products and services in collaboration with Fintech.

∙ 60.4% of 96.4 million Adult Population has access to mobile phones yet only 41.6% or 40.10 million had banking services showing a yawning gap of 18.12 million requiring attention (58.22 million – 40.10 million).

∙ Supporting capacity to implement (Capacity Building).

8.0 Food For Thought∙ What are the Challenges Confronting Deposit-Taking Institutions (DMBs, MFBs,

and PMBs) in the quest to mobilize deposits and create micro loans?

∙ What strategies are available to facilitate person to person and Business to Business payments? Can the transaction costs be further reduced?

∙ How can Agency Banking and ownership of mobile phones be utilized to expand the frontiers of Financial Inclusion towards achieving the 20% Target by the year 2020?

Thank you for listening

Slides of TechnicalPaper


Appendix N

Lead Technical Paper I

Mrs. Linda Quaynor, Managing Director, EFInA

The Status of Savings Mobilisation and its Impact on Financial Inclusion from the Findings from EFInA A2F Surveys

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The Status of Savings Mobilisation and its Impact on Financial InclusionFindings from EFInA A2F Surveys

A Presentation at the Third Annual Symposium of the Nigerian Microfinance Platform on May 24, 2017

By: Linda Quaynor


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A

B

C

Introduction & Background

Impact of Savings on Financial Inclusion

Savings Trend and Patterns in Nigeria

D Opportunities for Deepening the Usage of MicrofinanceBanks

Outline

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B

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D Opportunities for Deepening the Usage of Microfinance Banks

Outline


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About EFInA ▪ Enhancing Financial Innovation & Access (EFInA) is a financial sector development organization that promotes financial inclusion in Nigerian

▪ EFInA’s vision is to be the leader in facilitating the emergence of an all-inclusive and growth-promoting financial system . EFInA adopts a holistic approach to impact the market at three levels – micro, meso and macro levels

Purpose of Presentation ▪ This presentation is focused on the current status of savings mobilization and its impact on the overall financial

inclusion in Nigeria based on the outcomes of the EFInA 2016 Access to Finance ( A2F 2016 ) Survey

▪ It also seeks to examine the opportunities and approaches for MFBs to consider in savings mobilization

Leveraging A2F 2016 Research ▪ A2F research identifies the financial needs of the adult population and gives service providers data and analyses

to develop innovative products to serve them

▪ Provides insights into regulatory and market obstacles to growth and innovation in the financial sector

Approach & Methodology ▪ The A2F research is conducted biennially since 2008. The size of the participants included in each of the survey

was over 20,000 with a proportional representation across states. Nationally representative sample of Nigerian adults (18+) across all 36 states and FCT Abuja

▪ Results were weighted by the National Bureau of Statistics (NBS) to provide for the total adult population and benchmarked to national population estimates for verification

Background

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A Snapshot view of savings trend in Nigeria presents significant opportunity to improve savings culture

5

6.33.7

14.116.5

24.2

15.6

20.2

15.6

0

5

10

15

20

25

30

2008 2009 2010 2011 2012 2013 2014 2015

Gross Savings (In Trillions of Naira)

Source: World BankSource: World Bank

Source: EFInA Access to Financial Services in Nigeria 2010/2012/2014/2016 surveys

Population Growth vs. Financial Inclusion Trend

84.7 87.9 93.5 96.4

30.7 37.8

45.5 46.9

-

20.0

40.0

60.0

80.0

100.0

120.0

2010 2012 2014 2016

Total Adult Population

Adults who are FormallyIncluded

3.8%6.4% 3.1%

23.1%20.4% 3.1%

Adult Population Growth Rate

Formal Financial Inclusion Growth Rate

Drivers of savings of growth • Increase in adoption of alternative banking channels – mobile

money/banking, ATM, POS, • Agency banking policy• Revised microfinance policy framework and license of new microfinance

banks• Stability in the banking industry based on the consolidation of Nigeria

banks.

From 2015 Nigeria started experiencing economic crisis due to the decline inthe oil output. This also led to the reduction in the federal governmentexpenditures.

Source: World Bank

Gross Savings as a % of GDP

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2008 2009 2010 2011 2012 2013 2014 2015

Brazil

Kenya

Nigeria

Pakistan


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Over the last 10 years, CBN has implemented policies and programs to improve savings mobilization…

6

• LICENCING OF ADDITIONAL MICROFINANCE BANKS

• CASHLESS POLICY• NATIONAL FINANCIAL INCLUSION STRATEGY• MOBILE MONEY FRAMEWORK• CASH MANAGEMENT POLICY

• IMPLEMENTATION OF THE AGENCY BANKING GUIDELINE OF 2013

• ENHANCED REGULATORY GUIDELINES• UPDATE TO TIERED KYC REGULATION• RETAIL BOND PRODUCT INTRODCTION

• COMPULSORY CONVERSION OF COMMUNITY BANKS TO MFBS 2011

2012

2014

2007

• Although regulations around financial services innovation have improved opportunities for savings mobilisation, the use of formal savings products/services in Nigeria is still just over 50% of the 2020 National Financial Inclusion strategy

2016• RURAL FINANCIAL INSTITUTIONS BUILDING PROGRAM• NATIONAL MICROFINANCE DEVELOPMENT STRATEGY• REVISED MICROFINANCE FRAMEWORK

2009

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… including the National Financial Inclusion Strategy with specific objectives and targets…

Source: CBN NFIS Report

… however, Nigeria is still behind in its Financial Inclusion Targets


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Adult population growth has outpaced the growth in the banked population with financially excluded population growing from 39.2 million in 2010 to 40.1 million in 2016

Source: EFInA Access to Financial Services in Nigeria surveys

93.5 m

Adult Population18+ Years

87.9 m

▪ Between 2012 and 2016, the proportion of financially excluded to total adult population increased from 39.7% to 41.6%!

21.1%

30.0%

32.5%

36.3%

38.3%

2.5%

6.3%

10.5%

12.3%

10.3%

23.9%

17.4%

17.3%

11.9%

9.8%

52.5%

46.3%

39.7%

39.5%

41.6%

2008

2010

2012

2014

2016

Banked Formal other Informal only Financially excluded

Financially excluded

33.9m 36.9m11.3m11.5m

28.6m 34.9m15.2m9.2m

25.4m 39.2m14.8m5.3m

18.3m 45.4m20.7m2.2m

Financially excluded36.9m 40.1m9.4m10.0m

96.4 m

84.7 m

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Outline


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85% of adult population in Nigeria save money through the formal, informal and other channels

Source: EFInA Access to Financial Services in Nigeria 2016 survey

96.4

46.9

9.4

40.1

65.6

40.0

7.7

18.0

0.0

20.0

40.0

60.0

80.0

100.0

120.0

Total Formally Included Informal Only Excluded

Total Adult Population

Save/put money aside

Adult Population(in million)

85.2% of adults who are formally included (40 million adults) save/put money aside

▪ Of the total adult population, 68% save/keep money aside

▪ 44.9% of the financially excluded adults are saving

▪ Among the adults who use formal financial products, 85.2% save/put money aside

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11Source: EFInA Access to Financial Services in Nigeria 2012/2014/ 2016 surveys

Profile of customers by geo-political zones suggests the need to move away from the one-size-fits-all to a more customer-centric model for better savings mobilisation

Adamawa

Akwa Ibom

Bauchi

Baye-lsa

Benue

Borno

Cross RiverDelta

EbonyiEdo

Ekiti

Enugu

FCT

Gombe

Imo

Jigawa

Kaduna

Kano

Katsina

Kebbi

Kogi

Kwara

Lagos

Nasarawa

Niger

OgunOndo

Osun

Oyo

Plateau

Rivers

Sokoto

Taraba

YobeZamfara

Abia

Ana-mbra

33.3% have phones

42.0% are business owners*

80.2% rural

4million adults save N55b through formal channels

19.7% have no formal education

14.7% are subsistence farmers

51.4%Male49.0% Female

7 million adults save N104b throughinformal channels

62.2% have phones


75.8% rural

6 million adults save N68b throughformal channels


23% are subsistence farmers



84.2% have phones


81.4% urban

14 million adults save N208b through formal channels





46.7% have phones


74.7% rural

2 million adults save N41b throughformal channels





65.4% have phones


69.3% rural

8 million adults save N124b through formal channels





72.7% have phones


67.6% rural 6 million adults save N83b throughformal channels



49.8% Male50.2% Female


More people save in the South than in the North

*Business Owners comprises of Artisans, Traders of farming/non-farming products, Traders of agricultural inputs

South-WestSouth-East

South-SouthNorth Central

North WestNorth East


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Profile of Savers

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Demographics 57% are male 77% are between 26-55 years 89% have phones 53% live in urban 54% are business owners* 97% have formal education 43% save monthly

0.8 million adults save with

Microfinance Banks (MFBs)

Reasons for saving with MFBs53% considered the channel to be the most suitable for

saving

3 top reasons for saving with MFBs are: easy to use, proximity and access to soft loans

Demographics 58% are female 60% are between 18-35 years 73% have phones 55% live in urban 68% are business owners* 86% have formal education 49% save daily


Savings/Thrift Collector (e.g.

Esusu, Ajo)

Reasons for saving with Savings/Thrift Collector (e.g. Esusu, Ajo)

72% considered the channel to be the most suitable for saving

3 top reasons for saving with savings/thrift collectors are: easy to use, proximity and quick access

Source: EFInA Access to Financial Services in Nigeria 2016 survey*Business Owners comprises of Artisans, Traders of farming/non-farming products, Traders of agricultural inputs

Demographics 58% are male 71% are between 18-35 years 52% have phones 75% live in rural 44% are business owners* 70% have formal education 34% save occasionally


Family/Friends

Reasons for saving with Family/Friends65% considered the channel to be the most suitable for

saving

3 top reasons for saving with Family/Friends are: easy to use, trust and proximity

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Profile of Savers (Cont’d)

13

Demographics 51% are male 61% are between 18-35 years 51% have phones 72% live in rural 47% are business owners* 70% have formal education 32% save weekly

26.4 million adults save at

Home

Reasons for saving at Home82% considered the channel to be the most suitable for

saving

3 top reasons for saving at home are: easy to use, proximity and quick access

Demographics 51% are male 72% are between 26-55 years 71% have phones 68% live in rural 54% are business owners* 91% have formal education 59% save weekly

11.5 million adults save with Co-

operative group

Reasons for saving with Co-operative group72% considered the channel to be the most suitable for

saving

3 top reasons for saving with Co-operative group are: easy to use, proximity and quick access

Source: EFInA Access to Financial Services in Nigeria 2016 survey*Business Owners comprises of Artisans, Traders of farming/non-farming products, Traders of agricultural inputs

Demographics 64% are male 74% are between 26-55 years 92% have phones 62% live in urban 46% are business owners* 98% have formal education 50% save monthly

26.7 million adults save with Deposit

Money Banks (DMBs)

Reasons for saving with DMBs86% considered the channel to be the most suitable for

saving

3 top reasons for saving with DMBs are: safety from theft/fire, proximity and easy to use


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Contribution of MFBs to the Formal Financial Inclusion Level has declined significantly between 2012 - 2016

Source: EFInA Access to Financial Services in Nigeria surveys

▪ Between 2010 and 2016, the number of adult population using micro-finance bank witnessed a CAGR of -9%

▪ There was an increase of 1.4million users of MFBs between 2010 and 2012.

▪ This was followed by a major decline between 2012 and 2014 from 4.6 to 2.6

▪ This could be attributed to poor management, eroded capital base and the shut down of several micro-finance banks

▪ Also the high influx and subsequent collapse of many unlicensed /unregulated Microfinance institutions led to erosion of public confidence

1.8

2.6

4.6

3.2

0

1

2

3

4

5 -9%

2010 2012 20162014

Number of Adult Population Using Micro Finance Banks in Millions

millions

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There is huge potential to increase financial inclusion by attracting the population that ‘save at home’

Source: EFInA Access to Financial Services in Nigeria 2010/2012/2014/2016 surveys

52.8

23.8 20.5 19.6

6.0

1.7

58.6

23.0 20.6

24.5

12.4

4.9 2.4

59.1

25.5 23.1

17.7

9.4

4.7 1.8

65.6

26.4 26.7

11.5 10.57.0

0.8 -

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Total Number ofAdults who

save/keep moneyaside

Save at home Save with DMBs Save with group(such as a co-

operative, savingsgroup or

village/communityassociation)

Save with thriftcollector/savings

collector (e.g.Esusu, Ajo,

Save withfamily/friends

Save with MFBs

2010 2012 2014 2016

Num

ber o

f Adu

lts w

ho s

ave

(in m

illio

n)

Note: In 2010, “save with group” and “save with thrift/savings collector” were reported together

Number of Adults who save/keep money (in million) ▪ The total number of adults who save money increased from 52.8 million in 2010 to 65.6 million in 2016.

▪ However. there has been a significant reduction in the number of people who save with MFBs between 2012 and 2016 while increasing with DMBs in the same period

▪ This may suggest that MFBs are not effectively meeting the needs of customers


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Attracting the ‘save at home’ population can potentially add over NGN200bn to the formal banking system

Source: EFInA Access to Financial Services in Nigeria 2016 survey

553.2

21.0

206.6

120.9

60.6 85.3

-

100.0

200.0

300.0

400.0

500.0

600.0

Saving

Amount saved from different sources (NGN ‘billion)

▪ Given the profile and location of the adult population that ‘save at home’, MFBs are well positioned to convert a greater percentage of the over NGN200 billion deposits into the formal banking system.

▪ To do this, MFBs will need to develop an approach that addresses the peculiar needs of the adult population that ‘save at home’

▪ This will entail a combination product offering and delivery channel strategies

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Outline


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Savings Mobilisation is critical to Financial Inclusion by enabling Financial Access to Individuals at the Bottom of the Pyramid

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• Effective financial inclusion interventions with potential to transform the lives of those with limited access to financial service; enabling poor people to engage in meaningful economic opportunities

• Microsavings consist of small deposits offered to lower income families or individuals as an incentive to store funds for future use

• Microsavings enables better financial planning, which might smooth income, and potentially increase longer term income

• Savings provide an opportunity for the extension of microcredits to low income borrowers who typically lack collateral, steady employment and verifiable credit history

Access to Financial Services Comments

Through savings, the Bottom of the Pyramid (BoP) are able to access other financial services products

FinancialInclusion

Insurance

Pensions

Financial Literacy

Bank accountsRemittance

Savings

Credit

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D Opportunities for Deepening the Usage of Microfinance Banks

Outline


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20Source: EFInA Access to Financial Services in Nigeria 2016 survey

Opportunity in the Population with Potential to Save with MFBs

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25.7mDo not use formal financial services

but save/keep money

F

M48.2%

51.8%

Individuals OwnMobile phone(s)

43.4%96.4mTotal Adult Population

Urban20%

Rural80%

67.5% have formal education

(primary levels or higher)

Of the 25.7 million adults who do not use formal financial services but save/keep money:

• 83.0% receive financial advice from family/friends or spouse

• 60.4% are aged between 18 and 35 years

• 72.0% say they are prepared to learn how to use new technology

• 77.3% earn N20,000 or less

28.1% 18.5%

17.1%

9.5%

15.6%

11.2%

Of the total adult population, 26.6% (25.7 million adults) do not use formal financial services but save/keep money. This is a potentialmarket size for MFBs (N474.6bn). Banking half of this target population (12.9 million adults) will take us to 42% of the financial inclusionsavings target

North-West

North-East

North-Central

South-West

South-South

South-East

Main Income SourceSubsistence/Commercial farming 29%

Own business/trader (non-farming/ Services) 31%

Own business/trader (Agric products/ Inputs) 15%

From HH member/ Family/ Friends 19%

Salary/wages from individual with own business (informal sector) 4%

Salary/wages from a business/company (formal sector) 1%

Other, specify 1%

N309bn

N166bn

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Opportunities for MFBs

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Typically, customers use microfinance banks for loans to increase their capital for business growth and save small amounts

MFBs have the potential to gain customer loyalty due to close presence and proximity to some of their customers

Current economic recession could drive demand for microfinance account with microloan and savings account

There are available market studies which are useful tools to gain insight into customer needs and preferences

3-Tiered KYC –designed to ensure that the un(der)banked are not be precluded from opening accounts or obtaining other financial product and services due to a lack of acceptable means of identification

1 2 3 4 5


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Summary and Recommendations to Improve Savings through MFBs

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NGN309bIs the potential market size of savings deposit for MFBs.

With over 80% of the target residing in the rural areas.

As such , there should be a focused strategy in the rural areas

72%

of the target population say that they are prepared to learn new technology…

… and 43.4% of the target population has mobile phones

DFS

MFBs should therefore leverage on Digital Financial Services…

…to automate savings collections and loans disbursements

INNOVATION

MFBs will need to be innovative in terms of products development to respond to varying customer characteristics/needs…

… and give a better value proposition to customers for deposit mobilisation

TOUCH POINTS

MFBs will need to expand touch points ...

… through innovative mobile and agency banking channels

MFBs will need explore opportunities to bundle micro savings products …

…with microinsurance and micropension products to further deepen their offerings

BUNDLING

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How EFInA can Help

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Research

Enhance collaborative efforts through EFInA’s pillars

Advocacy Innovation Fund Capacity Building

• Continue to provide credible market information on the Nigerian financial sector

• Disseminate bespoke results at EFInA breakfast series, working groups & at stakeholders' events

• Work closely with regulators & policy makers in Nigeria to foster an enabling environment for innovative inclusive financial services & products for the un-banked & under-banked segments

• Host and facilitate innovation fora to trigger debate and ideas about pertinent issues.

• Financial support for new • ideas and approaches to

expanding financial access to the un-banked and under-banked segments.

• Provide linkages between local stakeholders and experts who can help with

the development &implementation of inclusive products

• Facilitate skills acquisition through opportunities to

attend training sessions or interact with success stories within and beyond Nigeria

Review status, understand challenges, leverage opportunities

Support stakeholder linkages for an enabling environment

Provide incentives for innovative products and ideas

Support growth of Nigerian capacity to implement

Primary efforts will target selected thematic areas

Women, Northern Nigeria, Non-Interest finance, Micro Savings, Micro Loans & Micro Insurance


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Data Dissemination Options

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EFInA Access to Financial Services in Nigeria 2008 / 2010 / 2012 / 2014 / 2016 surveys▪ Comprehensive database where information can be segmented in multiple dimensions, e.g., gender, geopolitical

zone, age, education, etc.▪ Data will be provided in SPSS or Ms Excel format▪ Key findings can be downloaded from the EFInA website

Data Options▪ Data request form can be downloaded from the EFInA website

▪ Full dataset ▪ Limited number of variables ▪ Customised analysis

[email protected]

Websitewww.efina.org.ng

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25Source: EFInA Access to Financial Services in Nigeria 2008/2010/2012/2014/2016 surveys

Thank You

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Appendix O

Technical Paper from International Special Guest

Mrs. Angela Wambugu, Associate Director of MicroSave Limited, Kenya

Progress Report on AFOS Foundation Project on: “Enhancing Savings Mobilization, Mobile Money, Agency / Branchless Banking and Digital Money for MFBs in Nigeria”

1 1CONFIDENTIAL AND PROPRIETARY: Any use of this material without specific permission of MicroSave is strictly prohibited

AFOS Foundation Project On:“Enhancing Savings Mobilization, MobileMoney, Agency / Branchless Banking andDigital Money for MFBs in Nigeria”

Progress Update

The Nigerian Microfinance Platform3rd Annual SymposiumChelsea Hotel, Central Business District

24th May 2017


2 2

About MicroSave

▪ MicroSave is a global consulting firm offering Research, Training and AdvisoryServices to financial service stakeholders, primarily focusing on the mass market.

▪ MicroSave has been in operation since 1998, and has offices in:

▪ Africa – Kenya, Uganda

▪ Asia – India, Indonesia, Philippines, Papua New Guinea and Vietnam

▪ MicroSave has implemented several projects in digital finance in Africa including:

▪ Advisory and pilot review of MPESA in 2008.

▪ Supporting Equity Bank in its transformation to a bank and subsequently in therollout of its Agency Banking operations (2011-2013).

▪ Established The Helix Institute of Digital Finance (2013)

▪ Diagnostics and technical assistance to Banks and MMOs (telcos and 3rd

parties) on Agent Network Management.

▪ Presently supporting a number of banks in Agent banking rollout in Uganda andNigeria.

3 3

Overall Project Objective

▪ To facilitate the enhancement of the use ofinnovative financial servicessolutions in savings mobilization bymicrofinance banks.

▪ To develop and deploy a shared savingsproduct using these solutions.


4 4

Specific Objectives1. To develop a comprehensive standard curriculum for training on savings

mobilization using mobile money, agency/branchless banking and digital money forMicrofinance practitioners.

2. To organize and deliver up-to-standard four streams of trainings on each of thesefour items to MFB practitioners in Abuja, Kaduna, Ibadan, and Owerri.

3. Develop best-in-class data collection tools and use same for the collection of data todevelop a shared savings product concept for the microfinance sector during thetrainings.

4. Develop a standard shared savings product for the microfinance sector by usingthese innovative solutions and accompany the full stretch of its rollout.

5. Develop and deliver practical guide on the effective deployment of thesesolutions for savings mobilization by the individual banks.

6. To identify the necessary regulatory / legal reforms for the maximum use of thesesolutions by MFBs.

7. To facilitate the development of a functional advocacy framework for creating anenabling environment for MFBs to maximize the use of these innovative solutions forfinancial inclusion.

8. To make a presentation of the key outcomes of the project during the NigerianMicrofinance Platform Symposium 2017.

5 5

DRAFT PRODUCT CONCEPT


6 6

▪ Promoting a savings culture – through affordable, convenientchannels.

▪ Helping customers achieve their lifestyle goals through saving.▪ For MFBs – Access to cheaper loanable funds.

Product Positioning

7 7

Product Concept

1. Product Design

2. Price

3. Place -Delivery/ Channels

4. Partnerships

5. Processes

6. Physical Evidence

7. Promotion

8. People –Staffing

The Product Concept

Case Study

PMJDY - India

▪ Launched 15th Aug. 2014

▪ $5.9bil deposits by April 2016

▪ Nov. 2016 – 255mil a/cs

▪ Caution – dormancy – need to have broad value proposition

Case Study - Mzansi –SA

▪ Costly delivery channel –the branch

▪ Competition between banks and with existing products


8 8

Next Steps

Activity Date

1 Pilot planning support to 2 MFBs June 2017

2 Pilot preparation by MFBs July 2017

3 Pilot implementation by MFBs Aug – Oct 2017

4 Pilot review Oct. 2017

5 Project Completion Report Oct. 2017

9 9

ADVOCACY MATTERS


10 10

▪ Regulations / cost of accessingclearing and settlement is prohibitivefor MFBs.

Recommendations

▪ Include capable MFBs in NIBSS.

▪ Define special eligibility criteria forMFBs – governance, core capitalrequirements, liquidity requirementsand the capital adequacy ratios.

▪ The process of granting access toNIBSS needs to be doneincrementally upon attaining specificset targets.

1. Clearing & Settlement Systems

Case Study – Kenya

▪ MFBs got access to clearing system through associate membership bankers association (heavy lobbying)

▪ DT Saccos – using a progressive process (WIP)

▪ Central Liquidity Facility (CLF) – lend to each other, issue own cheques, etc

11 11

▪ Perception in the public that MFBsare not adequately regulated - hencelack of trust to maintain depositswith MFBs.

▪ Weak self-regulation

Recommendations

▪ Public endorsement by CBN andNDIC.

▪ Strengthen self-regulation throughNAMB. CBN support in developmentof self-regulation guidelines.

▪ Consider external rating and badge ofhonour, for solid, well governed andconsistent MFBs.

2. Licensing & Regulation of MFBs


12 12

Recommendation

▪ CBN to consider allowing network of larger MFBs to participate in thecustomer enrollment process.

▪ CBN to fast track the rollout of national electronic ID system.

3. Access Limitations

▪ BVN – MFBs by law are not allowed to conduct customer registrations.

▪ The BVN number expires after 10 years and customer must re-enroll.

Case Study – IndiaAdhaar & the India Stack

(eKYC, ePayments, eSignatures, Digital Lockers)

13 13

▪ Cost of technology platform, agentnetwork management.

▪ Advertising fees for Agents may hinderagent banking operations.

Recommendations

▪ Shared technology platform.

▪ Shared agent network – managed by 3rd

party.

▪ Review the cash deposit requirements.

▪ Abolish/reduce advertising fees on agentoutlets.

4. Cost Limitations for DFS Deployment

Case Study – IndiaBusiness Correspondence Model – 3rd Party Retail

Agents


14 14

NAMB

ANMB ASMB AUMB

The Association

15 15

MicroSave Offices

Delhi Lucknow

HyderabadManila

Jakarta

Kampala

Nairobi Port Moresby

Tewkesbury

Hanoi

Singapore

India Head Office: LucknowTel: +91-522-2335734Fax: +91-522-4063773New Delhi Office:Tel: +91-11-41055537/38Hyderabad Office:Tel: +91-40-23516140

Kenya OfficeShelter Afrique House,Mamlaka Road,P.O. Box 76436, Yaya00508,Nairobi, Kenya.Tel: +254-20-2724801/2724806Fax: +254-20-2720133

Uganda OfficeNtinda Ministers VillagePlot 27, Valley DriveP.O. Box 29111Kampala, Uganda.Phone +256-312 202342Mobile:+256-706 842368

UK OfficeThe Folly, Watledge Close,Tewkesbury, GloucestershireGL20 5RJUK Tel. +44 1684-273729Mobile +44 796-307 7479

Philippines OfficeUnit 402, Manila Luxury Condominiums,Pearl Drive corner Gold Loop,Ortigas Center, Pasig City,Metro Manila, Philippines.Tel: +(632) 477-5740

Indonesia OfficeANZ Tower 23rd Floor, JI. Jend.Sudirman Kav. 33A,Jakarta Pusat 10210, Indonesia.Tel:+62 21 2954 6828/29 fax: +62 21 2954 6889

PNG OfficeCorner of Musgrave Street and Champion Parade,Port Moresby, Papua New Guinea. TeleFax No.: +675 321 8823/321 8854

Singapore Office3, Shenton Way, #13-06, Shenton House, Singapore (068805)Tel:+65 673 [email protected]

Contact us at [email protected]

PhotoGallery


Registration

Registration for the symposium


Officials for the Symposium (L - R) - Mrs. Wambugu, Mrs. Ladipo, Mr. Vester, Mrs. Martins, Mr. Etopidiok and Mr. Oluyemi

Dr Kenneth Achu and Funmilayo Akinwale of AFOS Foundation, finalising presentations before the commencement of the symposium


Gro

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Engaged participants during the Panel discussion

Chioma Mordi of SCGN and Mr. Rogers Nwoke, Hasal MfB MD, CEO


Members of the Organising Committee - Kunle Shittu, Fatima Olajumoke, Lilian Bassey, Mary Ipaye and Samuel Jesushola

Panel Discussion moderated by Mrs. Modupe Ladipo


Team of BAA Consult, Rapporteur for the Symposium

Members of the Communique team - Mrs. Tutu Ogunnaike, Samuel Jesushola and Lilian Bassey


Participants fully engaged at the Symposium

Yusuf Gyallesu, MD, NUT Endwell MfB and NAMB Chairman, Kaduna, flanked with other MDs from the Northern zone


Samuel Hezekiah, Joseph Onyeabor and Samuel Jesushola from Fortis MfB Plc.

Mr. Joe Odenigbo , Managing Director, Atlas MfB, with colleague, Mr. Jude Onuoha


Cross section of delegates from NAMB

An interesting moment at the symposium


Networking at the symposium

Mrs. Olatunde Agbeja, Deputy director, OFISD CBN and Ruskiyat Badmus, Head of Financial Control and Strategic planning, Hasal MfB


Mrs. Ladipo and Mrs. Quaynor having a chat at the symposium

Networking and chatting at the symposium


CBN OFISD Director and NDIC Director, flanked by other participants

Participants from Hasal MfB and NPF MfB


Networking

Members of the organising committee for the symposium. Fatima Olajumoke (NPF MFB) Dr. Achu and Mary Ipaye of AFOS Foundation.


Funmilayo Akinwale (AFOS) and Thompson Jombai (Fortis MFB), ensuring that all the symposium presentations are documented.

Scroll banners of event sponsors


Mrs. Tokunbo Martins presenting awards to the MD of EFInA, Mrs. Linda Quaynor

Mr. Joshua Etopidiok, Director, Special Insured Institution Department, NDIC presenting an award to Mr. Guillaume Verlence MD, ADVANS MFB


Mr. Bernard Vester of AFOS, presenting an award to Mrs. Tokunbo Martins

Mr. Bernhard Vester presenting an award to the Director, NDIC, Mr. Joshua Etopidiok

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